Wednesday, November 5, 2014

On, the Minimum Wage (And why it should be abolished)

Oh I know this is going to come off as exceptionally uncaring of me. As you can tell I don't care about the workers by the way this post is constructed already right. </sarc>

Well let me tell you I find that this is probably the easiest way to solve the issues that are plaguing the country. While it may seem counter-intuitive it actually at least in my scrambled brain seems to make perfect sense.

You let the market decide the price of labor. If the job is low paid enough there will be no one that wants to take said job. And if they do they will be looking for a better provider of the service. If we look at a job as another product for a consumer. Though slightly backwards where the company hiring to create products is consuming the service then we start to find why our current way of delivering jobs is broken.

Now lets look at the unemployment rate. Currently it is 5.9% Not too shabby but not good by a long shot. If the unemployment rate looked somewhere more along the lines of 3.0% then we would start having companies competing for the product again.

As soon as you reach 'full employment' The help wanted signs start coming back, and the wages start going up to attract people to the jobs that need filling, not the other way around. Costing the consumers more money is going to drive down the desire to purchase a product. In this case raising the price of a worker to 15.00/hr is going to make companies choose to purchase less labor.

If the minimum wage were lowered, or eliminated this would draw more people into jobs. Some still would be unable to afford to live on these wages to begin with but it's only the beginning. Once all the jobs are filled then the tide will start changing. More jobs can be added as the productivity of the nation will have risen. And suddenly there are more jobs than people that are seeking them.

Once the consumers of labor find this out and the jobs sit open for a month, two months, six months, they will start offering more to attract candidates to fill the jobs. More money, more benefits, more vacation days. Better working hours, more fringe benefits. People will start moving from the lower paying jobs to the higher paying better jobs because they can and the jobs are available. Then the jobs that have been left vacant will be forced to compete.

The wages will rise until the market for jobs starts to thin again. Then the process starts all over again. People make their money start buying start producing and create a simple loop that draws more people into the workforce. The minimum wage is terrible because it tells the consumer of the labor how little they can, and thus how little they will pay.

If there were no minimum then it would be the workers that would set the rate of pay. They wouldn't work somewhere that they didn't feel was paying them what they deserved. They would move on to a job that would provide for them what they felt they were worth. Instead they demand a minimum wage and the companies say 'Fine, we'll elminate positions to make up for the money we now have to pay the fewer workers.'